The future, and possibilities, for ‘Next Gen’ Insurers
by Deb SmallwoodMs. Smallwood is the Founder of Strategy Meets Action, a Boston firm firm ‘fully dedicated to helping the insurance industry modernize, optimize, and innovate to effectively support today’s needs and position for the business demands of the future.’ Reprinted with permission. Visit strategymeetsaction.com.
Take a look at the financials of the insurance industry and industry projections, and it may seem like business as usual. But peek just under the surface at many insurers and you’ll find a great deal of activity aimed at transformation – positioning for success in the rapidly changing digital world.
Typically, this activity takes the form of strategic initiatives – major enterprise-wide programs that require sustained commitment and investment. SMA has just released a new research report identifying these strategic initiatives, “Insurers’ 2016 Strategic Initiatives: Advancing Industry Transformation.” The report covers the priorities of these initiatives, sources of funding, and their role in helping insurers attain the future as a Next-Gen Insurer.
SMA research reveals that the top strategic initiatives remain virtually the same as 2015 – customer experience, analytics, new products, and core replacement. This is an indication that the commitment to transformation aligned with these four initiatives is rock solid.
However, the manner in which these initiatives are being funded is changing – with more funding coming from new sources outside the IT budget. In 2015, about a third of the funding for strategic initiatives came exclusively from capital investments. In 2016, funding from new sources will increase to over 40%.
These are the questions to explore – Why change? Why all the investment and resources devoted to rethinking and reshaping the company?
The answers are straightforward – Many recognize that we are entering a new digital era, with technology rapidly advancing and in the hands of customers and competitors. Emerging trends such as the sharing economy, along with the rapid adoption of technologies such as cloud and mobile are creating new opportunities (and risks) for insurers.
In fact, SMA predicts that the introduction of new products, business models, and business optimization will accelerate as insurers leverage maturing technologies and capitalize on emerging technologies such as wearables, the Internet of Things, drones, and others. Technology really is driving a lot of the conversation and action at senior levels these days.
In 2015, about a third of the funding for strategic initiatives came exclusively from capital investments. In 2016, funding from new sources will increase to over 40%.
Agility & Responsiveness
Ultimately, many insurers have a vision of building a company that is agile and able to respond rapidly to market opportunities and threats.
The common threads running through the strategic initiatives are the need to be digital and the key role of innovation. Although not the end games in and of themselves, digital and innovation are the enablers that form the foundation for future success. SMA has created the Next-Gen Insurer Model to describe what the future insurance company and what future success will look like.
The twelve initiatives that many insurers are pursuing are the mechanisms that insurers are using to become Next-Gen Insurers. There may be choppy waters under the visible tip of the iceberg, but the activity is very focused and taking individual companies and the industry as a whole in a new direction.
In the not too distant future – within five years by our estimate – the visible part of that iceberg will change as well, and a new industry will emerge.
For more information on the insurers’ strategic initiatives and the industry transformation underway, contact Deb Smallwood at firstname.lastname@example.org.